1995 (2) TMI 59 - HC - Income Tax

Summary

Issues:
- Interpretation of section 35 of the Wealth-tax Act for rectification of mistakes apparent from the record.
- Determining whether the original assessment order contained a mistake justifying rectification under section 35.
- Analysis of the Tribunal's decision on the application of section 35 and the subsequent appeals.

Analysis:
The judgment of the High Court of Andhra Pradesh dealt with an application under section 27(3) of the Wealth-tax Act, 1957, where the Revenue sought a direction to the Income-tax Appellate Tribunal to refer a question of law. The question revolved around the correctness of the Tribunal's decision regarding the rectification of a mistake in the original assessment order for the year 1983-84. The Wealth-tax Officer had corrected the value of shares from Rs. 693.75 to Rs. 754.92 under section 35 of the Act. The Tribunal, however, held that there was no mistake apparent from the record justifying the rectification under section 35.

The primary issue was whether the original assessment order contained a mistake that could be rectified under section 35 of the Wealth-tax Act. The court analyzed the provisions of section 35, emphasizing that only clerical or arithmetical mistakes could be rectified under this section. It was clarified that a review or reconsideration of facts or a change in decision on a debatable legal question was not permissible under section 35. The court referred to the Supreme Court's decision in T. S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50, which highlighted that a mistake apparent on the record must be obvious and patent, not requiring a long process of reasoning.

Furthermore, the court examined the timeline of events, noting that the Tribunal's decision, which was binding on the Revenue, had fixed the value of shares at Rs. 693.75 for the assessee in the previous assessment year. Subsequently, a judgment by the High Court altered this valuation. The court held that since the High Court's judgment was delivered after the rectification order by the Wealth-tax Officer, it could not be a basis for justifying the rectification. The court cited the case of CIT v. K. Venkateswar Rao [1988] 169 ITR 330 to support its reasoning on rectification based on subsequent judgments.

In conclusion, the High Court upheld the Tribunal's decision, stating that no error was committed, and the question raised was not referable as a question of law. The court dismissed the wealth-tax case, and no costs were awarded based on the circumstances of the case.